Lawyer: EPA Faces Decision on Waivers

Source: By Todd Neeley , DTN Staff Reporter • Posted: Wednesday, February 12, 2020

Tenth Circuit Court Ruling Affects About One-Third of Small-Refinery Capacity

Ethanol industry attorney Matthew Morrison said a recent court ruling in the industry's favor could have national implications. (DTN photo by Todd Neeley)
Ethanol industry attorney Matthew Morrison said a recent court ruling in the industry’s favor could have national implications. (DTN photo by Todd Neeley)

HOUSTON (DTN) — A recent biofuels industry victory in a federal appeals court could spell the end of the small-refinery exemptions program in its current form, the lead attorney for the ethanol industry in the case said on Tuesday.

Matthew Morrison, an attorney with Pillsbury Winthrop Shaw Pittman LLP in Washington, D.C., represented the Renewable Fuels Association, National Corn Growers Association, American Coalition for Ethanol and National Farmers Union and Farmers Union Enterprises, in the U.S. Court of Appeals for the 10th Circuit in Denver.

On Jan. 24, the court ruled EPA didn’t have the authority to issue small-refinery exemption extensions to three companies that were not originally granted waivers in 2017 and 2018.

The court also found EPA “abused its discretion” by not explaining its conclusion that a small refinery could suffer disproportionate economic hardship while also maintaining refiners passed on RFS compliance costs to consumers at the pump.

“The first thing, (the) important thing, is that it’s game over,” Morrison told an industry audience at the National Ethanol Conference in Houston.

“On these three exemptions, there’s going to be no real do-over. It’s a factual stipulation that, in fact, their exemptions had lapsed. So this is not something EPA could gussy up on remand and bring back to life.”

The court’s ruling, Morrison said, applies to at least small refineries — those producing 75,000 barrels or less per day — operating in six states in the 10th Circuit.

“Keep in mind we’re in the 10th Circuit,” he said. “The 10th Circuit is about six states, so it doesn’t affect all small-refinery exemptions. But I would say to you this is a pretty good hit at the agency in terms of looking at the legal basis and having a further court of appeals say EPA acted inappropriately and acted in excess of its authority.”

Morrison said the big question is whether EPA is going to ask for a review of the decision.

“The intelligence that we have is (EPA is) probably not going to seek a re-hearing,” he said. “They’re pragmatic. They know that the 10th Circuit grants less than 10% of requests for en banc (before the whole circuit) panels.”

In addition, Morrison said a Supreme Court review is “highly unlikely.” That’s because usually the Supreme Court only takes cases where an appeals court has a split opinion. The recent ruling in the 10th Circuit was unanimous.

“This decision today, it covers six states: Colorado, Utah, Wyoming, Kansas, Oklahoma and New Mexico,” he said.